Business Today

Coal shortage prompts state boards to hike power tariffs

Even a small state like Tripura has hiked tariff by 17 per cent. Punjab State Power Corporation Limited has filed a petition demanding for hike in power tariff by 55 per cent for 2012-13.

Sanjay Singh | April 4, 2012 | Updated 10:37 IST

Non-availability of fuel, especially coal and gas, and mounting losses of State Electricity Boards (SEBs), which are accumulating bank's rising advances of over Rs 80,000 crore, has prompted many states to hike power tariffs. Worst, power companies don't have fuel to generate power this summer.

While Haryana Energy Regulatory Commission (HERC) has hiked power tariff by around 10 to 15 per cent, Tamil Nadu Electricity Board has hiked power tariff steeply by 37 per cent. Other states like Andhra Pradesh and Odisha have raised tariffs up to 25 per cent while Bihar by over 12 per cent.

MUST READ:Coal India's dark future

Even a small state like Tripura has hiked tariff by 17 per cent. Punjab State Power Corporation Limited has filed a petition demanding for hike in power tariff by 55 per cent for 2012-13.

According to chief executive of Central Electricity Regulatory Commission (CERC) Pramod Deo, Uttar Pradesh and Rajasthan may also hike tariffs.


  • India has installed capacity of 187,000 MW, about one-fifth of China, and a peak-hour deficit of about 12 pc
  • Power output rose 8 pc to 72.7 bn kilowatthour in December 2011 from a year earlier
  • Only 12,160 MW capacity was added during 2010-11 as against a targeted 20,359 MW
  • SEBs & discoms accumulated Rs1,06,347 cr loss by 2009-10 Estimated loss by 2014-15 Rs1.16 lakh cr
  • Crisil reports losses could go up to Rs40,000 cr in 2010-11 as state governments have not revised their tariffs for longer period besides non-recovery of dues
Union power ministry officials said that the hike was imminent as most states have not revised tariffs for a long time. The ministry of power had earlier advised all states to write-off their cumulative losses, which have crossed over one lakh crore during the last fiscal.

The writing off of losses would also help these SEBs and discoms, which are in the red, to increase tariffs in line with the Central Electricity Regulatory Commission (CERC), which has been asking states to correct the cost of procurement of power and tariff mismatches.

According to S. K. Tuteja, member of the Shunglu Committee, which recently submitted its report on SEBs, the move is encouraging.

"But we need to get more private investment in the distribution sector and improve technology for private distributors to minimise their transmission and distribution losses," he says.

The tariff hikes and better implementation of technology is required to facilitate restructuring of almost Rs 80,000 crore worth of loans that SEBs have, Tuteja added.

The Rural Electrification Corporation, one of the biggest lenders to the sector, has an exposure of Rs 9,000 crore to Tamil Nadu, Rs 6,000 crore to Andhra Pradesh and Rs 1,000 crore to Rajasthan. In Uttar Pradesh, its exposure is Rs 6,000 crore.

Similarly, other states too have massively lent from REC. When asked about the tariff hike, the director general of Association of Powerw Producers, Ashok Khurana, said that it will help them purchase gas and coal.

"There will be shortage of fuel for power companies during the 12th plan period as well. The trend to hike tariffs is positive. You do not have adequate domestic supply of coal and gas, but by increasing tariff in next few years, power companies will definitely be able to import gas and coal, which are expensive. They will, at least, not shut down operations due to non-availability of coal or gas. At least, 40,000 MW of coal and gas combine units are working at sub-optimal level, which is around 50 per cent," he added.

Courtesy: Mail Today

  • Print
A    A   A